Gen Z faces several priorities, milestones, and responsibilities — whether buying a home, getting married, starting a family, paying off school loans, saving for their future, or enjoying the early years of their lives.
So, how do you tackle these issues prudently and without sacrificing all that comes with living in the here and now? Consider the following steps that you and all Zoomers should consider to solidify your financial present and position you well for the future, whatever it holds.
Start (and continue) saving for retirement
Setting aside money each month toward retirement when you’re young can make a huge difference later, thanks to the power of compound growth. But don’t wait. Commit to contributing to an IRA or 401(k) now.
Take advantage of your employer’s retirement plan matching contributions
Some employers will kick extra money into your retirement plan once your contributions reach a certain level. If your employer does offer a match, do what it takes to hit the match threshold. Otherwise, you’re leaving money on the table.
Maximize your workplace benefits
Take the time to review the benefits your employer provides. For example, if a legal services benefit is available, it may make sense if you need a will. If a health savings account (HSA) is offered, that’s a tax-favored option potentially worth considering.
Purchase disability insurance
If you have people who depend on your income, disability insurance replaces some of that income if you become disabled. Ask your employer if disability insurance (short-term or long-term) is offered as a benefit. If so, it may be worth it.
Establish beneficiaries for retirement accounts
If you’ve contributed to an employer’s 401(k) plan or an IRA or purchased a life insurance policy, establish beneficiaries for those plans and policies. Update beneficiaries as your circumstances change.
Get a firm handle on debt
If you’re not careful, interest-bearing debt from loans, credit cards, and the like can mount quickly. Use cash and your debit card, shop for lower-interest credit cards, and commit to paying off credit card balances promptly.
Build an emergency fund
What happens if you lose your job or face an unexpected major expense? Establish an emergency cash reserve instead of leaning on a high-interest credit card. Plan on keeping at least 3-6 months’ worth of expenses in an account where the money is readily available, such as a savings or money market account.
Own the right home
A home is the most significant financial investment many people will ever make. When it comes time to buy a home, maintain a manageable level of debt and avoid stretching yourself too thin financially.
Get a handle on your cash flow
How much money do you have coming in each month? How much do you pay each month to cover hard expenses? Once you see the numbers on each side of the ledger, you can tailor your spending and saving habits accordingly.
Prioritize your most important goals and make a plan to achieve them
What are your life and financial priorities: buying a home, traveling more, or building a business? Having clear goals and setting them down in writing can provide the extra impetus to achieve them. Then, work with a financial planner to develop a written plan for how to get there.
The reality is that time is on your side. But don’t let the comfort of time hold you back from taking potentially important steps today to ensure you live the life you want tomorrow.
